The European Commission wants to attract up to €18B in loans and grants to cover half of Ukraine.

The European Commission has prepared three financial support mechanisms for Ukraine, writes Politico. The European Commission wants to attract up to €18B in loans and grants to cover half of Ukraine’s expected budget deficit of $38-40B in 2023. The first option, which the Commission describes as the most advantageous, is to borrow the money against the so-called headroom, or the difference between the maximum amount the bloc can call in from EU countries and actual EU spending. The second option is a repeat of the method used thus far, whereby countries provide budgetary guarantees to the Commission. But this time, national guarantees would need to cover 100% of the amount, instead of the 61% previously guaranteed, as “there is no other budgetary cover” left in the EU budget, the document says. In addition, EU countries would also need to provide counter-guarantees in case of default from their peers if losses occur. The third option is similar to the second but without national guarantees.

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